Spain: Residency for foreigners who buy houses

By CIARAN GILES, Associated Press
| 8:18 a.m.Nov. 19, 2012

45-year old office manager Irene Gonzalez of Spain, left waits with a friend, to be evicted from her home, in Madrid, Monday Nov. 19, 2012. The police and court officials did not show up at the planned time and she still does not know if they will come later or on another day to evict her. Spain recently approved a two-year suspension of evictions for some needy homeowners unable to pay their mortgages, but activists said the government failed to address the larger issue of how those who give up their homes may still remain indebted, sometimes for the rest of their lives. Public attention on the issue intensified greatly in recent weeks after two homeowners facing eviction committed suicide. (AP Photo/Paul White)
— AP

45-year old office manager Irene Gonzalez of Spain, left waits with a friend, to be evicted from her home, in Madrid, Monday Nov. 19, 2012. The police and court officials did not show up at the planned time and she still does not know if they will come later or on another day to evict her. Spain recently approved a two-year suspension of evictions for some needy homeowners unable to pay their mortgages, but activists said the government failed to address the larger issue of how those who give up their homes may still remain indebted, sometimes for the rest of their lives. Public attention on the issue intensified greatly in recent weeks after two homeowners facing eviction committed suicide. (AP Photo/Paul White)
/ AP

45-year old office manager Irene Gonzalez of Spain, centre offers cake to well-wishers, friends and journalists while she waits for her eviction from her home in Madrid, Monday Nov. 19, 2012. The police and court officials did not show up at the planned time and she still does not know if they will come later or on another day to evict her. Spain approved a two-year suspension of evictions Thursday for some needy homeowners unable to pay their mortgages, but activists said the government failed to address the larger issue of how those who give up their homes may still remain indebted, sometimes for the rest of their lives. Public attention on the issue intensified greatly in recent weeks after two homeowners facing eviction committed suicide. (AP Photo/Paul White)— AP

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45-year old office manager Irene Gonzalez of Spain, centre offers cake to well-wishers, friends and journalists while she waits for her eviction from her home in Madrid, Monday Nov. 19, 2012. The police and court officials did not show up at the planned time and she still does not know if they will come later or on another day to evict her. Spain approved a two-year suspension of evictions Thursday for some needy homeowners unable to pay their mortgages, but activists said the government failed to address the larger issue of how those who give up their homes may still remain indebted, sometimes for the rest of their lives. Public attention on the issue intensified greatly in recent weeks after two homeowners facing eviction committed suicide. (AP Photo/Paul White)
/ AP

45-year old office manager Irene Gonzalez of Spain stands by her front door while she waits to be evicted from her home, in Madrid Monday Nov. 19, 2012. The police and court officials did not show up at the planned time and she still does not know if they will come later or on another day to evict her. Spain approved a two-year suspension of evictions Thursday for some needy homeowners unable to pay their mortgages, but activists said the government failed to address the larger issue of how those who give up their homes may still remain indebted, sometimes for the rest of their lives. Public attention on the issue intensified greatly in recent weeks after two homeowners facing eviction committed suicide. (AP Photo/Paul White)— AP

+Read Caption

45-year old office manager Irene Gonzalez of Spain stands by her front door while she waits to be evicted from her home, in Madrid Monday Nov. 19, 2012. The police and court officials did not show up at the planned time and she still does not know if they will come later or on another day to evict her. Spain approved a two-year suspension of evictions Thursday for some needy homeowners unable to pay their mortgages, but activists said the government failed to address the larger issue of how those who give up their homes may still remain indebted, sometimes for the rest of their lives. Public attention on the issue intensified greatly in recent weeks after two homeowners facing eviction committed suicide. (AP Photo/Paul White)
/ AP

MADRID  Looking for a new place to call home? Spain is hoping to give you a little bit more than a welcome basket of baked goods if you decide to move there. In an attempt to reduce the country's bloated stock of unsold homes, the government is set to offer permanent residency to any foreigner provided they buy a house or apartment worth more than (EURO)160,000 ($200,000).

The plan, unveiled by Trade Ministry secretary Jaime Garcia-Legaz Monday and expected to be approved in the coming weeks, would be aimed principally at Chinese and Russian buyers. Spain has more than 700,000 unsold houses following the collapse of its real estate market in 2008 and demand from the recession-hit domestic market is stagnant.

Prime Minister Mariano Rajoy stressed Monday that the plan has not yet been finalized, but added that Spain "needs to sell these homes" and that getting them off the market could help revive the nation's devastated construction industry.

The plan to unload the unsold homes comes as thousands of houses have been repossessed by banks and their owners evicted because they cannot pay their mortgages. The government last week approved a decree under which evictions would be suspended for two years in specific cases of extreme need.

The country's residency offer would beat others in bailed-out countries such as Ireland and Portugal, where residency papers are offered to foreigners buying houses worth more the (EURO)400,000 and (EURO)500,000, respectively. It was not immediately clear if the residency would only refer to Spain, and not the European Union.

Spain is in the midst of a double-dip recession with 25 percent unemployment, though Rajoy said he believes Spain has managed to avoid a financial implosion and will start growing again in late 2013 and in 2014.

"I'm convinced that the worst is over," Rajoy told reporters after meeting with Brazilian President Dilma Rousseff.

The stricken state of the country's real estate market was highlighted Monday by figures from the Bank of Spain which showed that the level of bad debt in the country's banks had risen to a record 10.7 percent of their loan total in September.

The bank said the amount totaled (EURO)182 billion, up from (EURO)179 billion in August - the 15th monthly increase in a row.

The 16 other countries that use the euro have agreed to lend Spain up to (EURO)100 billion to help support the country's banks weighed down by these bad loans and investments. On top of the bank loan, Spain has been under pressure to apply for more outside financial aid to help it manage its debt and deficit. The European Central Bank has insisted on the move before it will make good on its pledge to buy the bonds of certain troubled countries to help lower their borrowing costs.

Spain says it is waiting to know all the conditions that might come attached to the rescue package before making a decision.

Shawn Pogatchnick in Dublin, Ireland and Barry Hatton in Lisbon, Portugal contributed to this report.